World Bank trust funds

31 March 2015 | Inside the institutions

Amalia Falls, a Guyana REDD+ Investment Fund project. Credit liveinguyana blogspot

World Bank trust funds are financing arrangements with contributions from one or more donors, which can include the World Bank Group. They fund a wide range of projects and activities, either free standing or programmatic, and can be country-specific, regional or global in scope. The Trust Funds and Partnerships Department (DFPTF) oversees trust fund management and is part of the Bank’s Development Finance (DFI) vice-presidential unit. A percentage of funds is retained by the Bank for supervision and analytical work. In financial year (FY) 2014 there were 982 trust funds, holding a total of $30.09 billion.

Types of trust funds

There are three types of trust funds, in which the Bank Group plays a variety of roles. These range from a limited financial trustee role, to the implementation of fund activities:

IBRD/IDA– Finances projects implemented or supervised by the Bank’s middle or low-income country arms, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) respectively. These account for 35 per cent of Bank trust funds, and are disbursed through:

  • Bank-executed trust funds (BETF) – Funds that support the Bank’s work programme, typically knowledge, advisory and technical assistance. Example: Pacific Facility (PACF).
  • Recipient-executed trust funds (RETF) – Funds that the Bank passes on to a third-party recipient; the Bank plays an operational role, such as appraising and supervising funded activities. Example: Caribbean Catastrophe Risk Insurance Facility (CCRIF), Japan Social Development Fund (JSDF, see box).

In FY14 78 per cent of funds were from sovereign donors (countries) and 22 per cent from non-sovereign donors (e.g. foundations, multilateral development banks).

Financial Intermediary Funds (FIFs) – Supports global development initiatives and partnerships. The Bank acts as a financial trustee by providing a financial intermediary service, i.e. holding or transferring funds. It is the fastest growing fund category, accounting for 63 per cent of trust funds. Example: Clean Technology Fund (CTF), Guyana Redd+ Investment Fund (GRIF), see box.

In FY14 94 per cent of funds were from sovereign donors, three per cent from intergovernmental organisations, two per cent from non-profit entities, and one per cent from the Bank.

IFC – Managed by the International Finance Corporation (IFC, the Bank’s private-sector arm). They account for two per cent of trust funds. Example: Microfinance Enhancement Facility (MEF), Global Agriculture and Food Security Program- Private Sector Window (GAFSP-PSW), see box.

In FY14 66 per cent of contributions for advisory services were from sovereign governments, 24 per cent from the Bank, five per cent from intergovernmental organisations, four per cent from non-profit entities and one percent from for-profit entities.

Social and environmental accountability

There is a wide set of criteria that apply to Bank activities to ensure that standards of operation are met, however, they differ depending on the type of trust fund used and the Bank argues that these result from its varying role in each.

IBRD/IDA trust funds:

  • BETF: Activities funded under BETF’s fall under the Bank’s Planning, Budgeting and Performance Management Manual and the Bank’s Administrative Manual. The Bank’s operational policies and procedures, including the social and environmental safeguard policies (currently under review, see Observer Winter 2015), are not applicable. The Administrative Manual is outside of the mandate of the Bank accountability mechanism, the Inspection Panel (IP).
  • RETF: Activities funded under RETF’s follow the Bank’s operational policies and procedures, including the safeguards, however, smaller-size grants may be subject to simplified procedures. The Bank’s operational policies are within the IP’s mandate, which gives the IP authority to review RETF activities.


Steering committees are set up for each individual FIF as the decision-making body. FIF partners who are implementing agencies are responsible for ensuring that their safeguard policies are followed on projects or programmes that they implement. FIFs are not subject to the Bank’s operational policies, as the Bank acts a trustee rather than as a partner entity, unless the Bank is also an implementing agency.

IFC trust funds:

IFC-managed trust funds are subject to its sustainability framework, which consists of the performance standards, access to information policy, and policy on environmental and social sustainability. The sustainability framework was updated in 2012, furthermore, all investments made prior to 2006 are subject to the IFC’s environmental and social safeguards.


The World Bank Finances website provides datasets for the Bank as a whole and more specifically for each type of trust fund. In 2013 more datasets as well as a searchable directory of Bank trust funds were introduced, however, the directory only covers 2009-2013.


A 2011 report by the Bank’s Independent Evaluation Group (IEG) concluded that trust funds are useful in providing coordinated grant financing and that they may add value by financing international and regional public goods. It noted that trust funds could be “indispensable in providing coordinated grant financing in response to country emergencies”. However, it also raised concerns that “trust funds have not been a consistently effective way of providing financing. They do not necessarily integrate well with countries’ own programmes, nor do they foster coordination on the ground with other sources of aid.” It found “no clear evidence that trust fund resources have added to global [overseas development assistance].” Furthermore, “many global funds – including funds that … finance the provision of regional or global public goods – involve little or no recipient participation in their initiation and design” (see Update 77).

In 2015 IEG will review the effectiveness of the Bank Group partnership programmes, including trust funds.


The Bank is currently undertaking reforms to improve trust fund management, transparency, cost recovery and results reporting, including to ensure that earmarked resources complement other sources of funding and are aligned with core Bank Group objectives. At the core of the reforms are simplified processes, standardised trust fund models, and better portfolio monitoring. The changes include the simplification of the clearing mechanism for trust fund development, by only requiring one concept note per proposal and by providing a ‘one-stop-shop’ for clearance under a single dedicated Bank unit, rather than requiring approval from multiple units. To recover costs, an indirect cost and a flat percentage fee for any personnel working on a trust fund is being considered.

Examples of World Bank trust funds

IBRD/IDA- Japan Social Development Fund (JSDF):

This RETF is designed to provide grants to the most disadvantaged groups in society. It is funded by the Japanese Government and disbursed by the Bank.

FIF- Guyana Redd+ Investment Fund (GRIF):

GRIF funds activities under Guyana’s Low Carbon Development Strategy (LCDS), and is financed by performance-based payments from Norway, up to the equivalent of $250 million. The Bank was appointed as a trustee, to offer financial intermediary services. Available funds in FY14 were $46 million.

IFC- Global Agriculture and Food Security Program- Private Sector Window (GAFSP-PSW):

The GAFSP is a FIF set up to boost agricultural production in low-income countries. It is made up of the public and private sector windows. The private sector window (PSW) was launched in 2011 by the IFC to improve the commercial potential of small and medium sized agri-businesses. Total financing to GAFSP in FY14 was $1.2 billion, $238.3 million of which came from PSW loans, credit guarantees and equity.